The U.S. Supreme Court left intact rulings that may force Argentina to pay billions of dollars to holders of repudiated bonds, rejecting the country’s appeal in a case that has roiled financial markets and triggered threats of a new default.
Argentine dollar bonds plunged today after the justices turned away contentions that lower court rulings misread bond agreements and violated the country’s sovereign immunity. Along with a high court ruling on another case related to the 2001 default, the rebuff is a victory for a Paul Singer-controlled hedge fund and other defaulted debt holders who have refused to accept the government’s restructuring offer of about 30 cents on the dollar.
NML, an affiliate of Elliott Management Corp., had argued that an equal-treatment, or “pari passu,” clause in the bond agreement bars Argentina from treating the restructured securities more favorably than the defaulted bonds.
A federal trial judge agreed with that argument, as did the New York-based 2nd U.S. Circuit Court of Appeals in two rulings.